Unity Announces Deal to Set Up China Joint Venture Amid Expansion Plans

Unity Software Inc, the US developer whose software is used in video games like Tencent Holdings' Honor of Kings, said on Tuesday it had struck a deal to create a joint venture with multiple partners, valued at $1 billion (roughly Rs. 7,900 crore), from its China business.

The announcement follows an exclusive Reuters report last week that Unity was in talks to spin off its China unit to help it expand in the world's biggest games market.

Partners in the joint venture include Alibaba, China Mobile, Oppo, ByteDance's Douyin, PCI Technology and G-Bits Network Technology Xiamen, Unity said in a statement on its official WeChat account.

The company will retain majority ownership and control of the Chinese JV, Unity said.

The JV, named Unity China, will shortly start building local custom versions of its core products for game developers and will become the exclusive distributor of Unity's products and services in China, according to the statement.

Unity entered China in 2012 and its eponymous software, known as a game engine, powers many of the country's most popular games, including miHoYo's Genshin Impact.

Last week, Reuters reported that Unity was in talks to spin off its China unit to help it expand in the world's biggest games market. 

The talks took place as strained Sino-US relations exacerbate sensitivities over technology transfer and data handling across borders, prompting tech firms to reappraise their operations in China.

At the same time, there is growing interest in expanding game-making software to new technologies such as the so-called metaverse, an immersive three-dimensional internet.

Unity entered China in 2012 and its eponymous software, known as a game engine, powers many of the country's most popular games such as Honor of Kings from gaming leader Tencent, and Genshin Impact. Rivals include Tencent-backed Epic Games, the US developer of the increasingly popular Unreal Engine 5.

© Thomson Reuters 2022